Lehigh Explores Impacts of Paid Search Advertising on Sites Like Yelp

Yelp’s surprisingly durable platform continues to sway consumers’ decisions about who and where to patronize, with 163 million unique monthly visitors.

This is especially true with the advent of paid advertising that appears alongside search results. But what influence does it have on the production end? The Lehigh University College of Business and Economics recently discussed a new study that suggests “paid search advertising can be a profitable investment for small businesses.”

Despite the exponential growth of digital advertising in the past five years, research has uncovered that the effects are actually “limited for branded advertisers since consumers already know and intend to buy from the brand when they search.”

This fact sparked the imaginations of Lehigh economics professor Daisy Dai and Harvard Business School Administration professor Michael Luca who were both interested in understanding “the impact on small businesses whose names are less known and who may gain from an increase in visibility.”

The duo eventually found themselves at the helm of the “largest-scale search advertising experiment run on online platforms in terms of number of businesses involved.” Dai and Luca conducted an experiment in which they took a pool of 18,000 restaurants and randomly assigned free search advertising packages to 7,000 of them, most of which had “not actively advertised on Yelp prior to the experiment.”

According to the article, the researchers examined “page views of the business’ Yelp page, requests for directions, phone calls to the restaurants from Yelp’s mobile page or mobile app, and clicks on the restaurants’ URL on their Yelp page” and compared the “outcome of businesses that did or did not receive free advertising.” The experiment found that “Yelp advertising leads to a 25 percent increase in page views and a 9 to 18 percent increase in purchase intentions, such as direction requests, visits to the restaurant’s website and calls to the restaurant,” according to Dai.

Another insight was related to the number of Yelp reviews each business received, which grew by 5 percent, then “dropped to zero immediately after the advertising period, suggesting ads temporarily raised awareness of businesses that users otherwise would not discover.”

Dai concludes, “Our study finds that an average local restaurant can benefit from search advertising on Yelp. Unlike previous online advertising experiments that usually focus on a few big brands, we yield insights for small businesses.”